A tax free municipal bond pays an effective annual rate of 7.2%. If your tax rate is 30%, then the effective annual rate that a comparable corporate bond would have to offer you to earn an equivalent after tax return would be closest to:
A) 5.0%
B) 7.2%
C) 9.4%
D) 10.3%
D
Explanation: D) Before tax = after tax/(1 - T) = .072/(1 - .3 ) = .10285714
Business
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Indicate whether the statement is true or false
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